1. Agriculture. Necessity. This business will thrive so long as humans exist.
2. Energy trends will benefit companies operating in USA long term at an accelerating rate.
3. Company is diversified worldwide within agriculture.
4. Agrium beats about 90 percent of investments long term, worldwide. Example:
This isn't intentionally bearish (I'm actually positive on AGU and looking for the time to buy), but there other side of the coin is:
1) Fertilizers aren't necessary every year - although with current crop prices, this should encourage the use of chems
2) Input costs (e.g. energy) are increasing from the 2012 lows - Inputs are still reasonable, but the trend is up
3) Technically it's in a rough spot. Like others have said, there's "no reason" for it to be down. But with support levels breaking down and the trend pointing down, it makes the new money hesitate as to where to get in.
Personally, I just bought 87.50 calls last week as the price bumps against the bottom of the 5 year channel. But if that breaks (around $85), support doesn't really show up until $70.
AGU has been a loser investment for months now but it isn't as if it is destined to remain in the toilet, going down pretty much every day regardless of how the market is doing. With the cash flow they are generating and given that they have cut back on their CAPEX expansion plans big time, they should raise the dividend another 50% so we get a 3%+ yield. That should perk things up. That is what POT is doing while MOS is about to launch a major stock buyback this year. Eventually revenues and earnings will tell the real story but there are things which can be done in the meantime to enhance shareholder value. AGU undertook its recent buyback and dividend increases because it was being threatened by JANA Partners. Now that that danger has passed, it looks as if the AGU management and BOD are just going back to their usual, sleepy MO. Perhaps somebody will come along and buy the whole thing for about $125 a share which is its approximate intrinsic value. Fat chance though of that happening.
Buy into fear, sell into cheer.
What a rare opportunity we have to buy shares in a pristine and necessity business at bargain prices.
Sentiment: Strong Buy
You are right. Who cares that the stock is down 6 straight weeks and continues to head down regardless of how the overall market is doing or even other stocks in its sector? I mean, this is a great company, well managed and is executing its business strategy flawlessly. Which is why it is hard to understand why it just continues to get pounded every day. And with each passing day, the bargain price of getting in just keeps getting better and better. Yeah, what a bargain. Good thing we know how good it is even if the rest of the market doesn't.